Change Comes To the White House?

The appointments of Gene Sperling as the director of the National Economic Counci and Bill Daley as new Chief of Staff ratify what many have been speculating – the Obama administration is undergoing a decisive and radical change in approach.

Make no mistake, Bill Daley has never been a supporter of the kind of policies President Obama pursued last year. And indeed, in a December 2009 Washington Post Oped, he counseled the administration and the Democratic leadership against moving too far to the left and against overreaching, writing: “either we plot a more moderate, centrist course or risk electoral disaster not just in the upcoming midterms but in many elections to come.”

Daley has long been a supporter business – both as Secretary of Commerce in the Clinton Administration and as a senior executive at JP Morgan. Moreover, he well understands how to bring a perspective on business and finance to a Administration that has been frequently tone deaf.

Daley saw firsthand what President Clinton was able to accomplish during the mid-nineties – both in terms of balancing the budget and reducing the size and scope of government – and can be expected to follow a similar approach.

Look for the State of the Union Address to be the initial focal point of the re-positioning for the administration, followed by the February 7th speech to the Chamber of Commerce.

Indeed, it can be expected that President Obama will announce some serious new business-friendly incentive programs to help stimulate job creation at a time when the Administration has recognized – albeit belatedly – that it needs to change its focus to jobs and the economy.

Gene Sperling, one of the principle architects of the recent tax-cut deal with the Republicans, is a fellow Clinton Administration alumnus from the era of Newt Gingrich -- when similar deals were negotiated with the Republicans.

Sperling understands one fundamental fact. The Democrats need to embrace fiscal discipline if they are to have any chance of winning the 2012 election.

That being said, Sperling also recognizes that if the Democrats do embrace fiscal discipline and promote a social welfare policy that expands rather than retracts the social safety net, they are almost certain to win the battle of public opinion for Independents – especially at a time when the Republicans have become committed to engaging in the same kind of overreaching that the Republicans did in the mid-nineties and arguably that President Obama and the Democratic leadership did during his first two years in office.Of course this analysis is necessarily tentative.

But with House Republicans scheduling a vote on health care reform allowing no amendments after having excoriated the Democrats for doing the same thing, promising to reduce spending by 100 billion dollars without offering a plan to do this, and passing rules that allow future tax cuts to be enacted without offsetting spending reduction – effectively indicating that they are exempt from deficit reduction – there is substantial evidence over the past week that the Republicans are pursuing policies that are arguably at variance with what they promised.

But with an electorate that is more conservative than it was even two or four years ago and certainly more so than it was during the mid-nineties, as well as a population that is trending away from the northeast and towards the south and southwest --President Obama’s prospects for 2012 have become more and more daunting.

In light of these ideological and population trends that decidedly benefit the GOP, it is all the more important that the president and Democratic leadership need to move decisively back to the center.